Has Wi-Fi become as essential as a TV in a hotel room? Should coffee drinkers be entitled to expect to log on with their latte? Emily Manson examines whether it's economical to provide free Wi-Fi
Starbucks' recent announcement that it will now provide free ‘one click' internet access in all of its outlets is the tip of the Wi-Fi iceberg.
The move removes the previous requirement for customers to be members of its loyalty scheme. Starbucks said it was a "direct response to customers asking for a simplified service" and reflects a growing customer expectation that Wi-Fi should be available any time, any place and for free.
Chris Bruce, CEO of BT Openzone which provides the Starbucks Wi-Fi, says: "Wi-Fi is hugely popular and demand is growing significantly year on year because of the number of new devices and easy to consume data now available."
But it's a tough call for hospitality operators. It's important to keep up with customer expectations, but it's hard to get it right. It costs money to install and maintain Wi-Fi, but offering it affords free PR and goodwill, while setting you apart as a modern business.
Bryan Steele, chair of the Hospitality Professionals Association's (Hospa) IT Community, says: "Customers expect it for free, but whether it should be free is different. The public don't understand the delivery aspect for hospitality operators."
One key stumbling block is the bandwidth. Where lots of people want to use the internet at the same time, operators are going to need a high bandwidth, or risk the system grinding to a halt or crashing. Steele explains: "The biggest challenge is that people expect to do the same as they do at home in hotels or cafes. But if lots of people use high resource applications like iplayer and gaming, then those services won't work as well as people might like."
While it's relatively easy and inexpensive to install a basic Wi-Fi system, installing high bandwidths that can cope with traffic peaks and packages, like skype and video streaming, are expensive.
"Guests don't realise it can costs thousands of pounds a year to provide a good service and that's on top of the initial set up costs. The service has to be managed and run properly. You can't just throw in a line and forget about it," warns Steele.
In addition, there's the maintenance to consider. Users, especially in hotels, expect the service to work 24:7.
"If Wi-Fi breaks down at home, people accept that it takes time to fix, but in a hotel especially, guests won't put up with it taking days to fix," says Steele.
"You have to provide a facility which is covered by a good service contract and you pay for that service level. Otherwise you risk not having broadband when you've advertised it and guests may well become frustrated and angry."
Roger Matthews, director of sales and Marketing at The Cloud is keen to emphasise the importance of providing a safe browsing experience for customers, so that inappropriate content can't be encountered.
"You need to ensure your service provider uses the Internet Watch Foundation URL filter list," he advises. "The cumbersome process of authentication, authorisation and accounting that comes with setting up a wireless service needs to be bundled into the service, alongside the due diligence process of legal liability, data protection and intercept."
But, Bruce warns, it is important to provide a service which not only matches your customer's expectations but is also affordable within a commercial offering.
"There are genuine costs and it becomes a question of how operators package their offer for different types of property and customers," he says.
Bruce suggests adopting incremental costs. Low level broadband can be offered for free or for a short period of time, after which the facility needs to be paid for.
"It's possible to offer low bandwidth for free to enable eâ'mail browsing or printing a boarding card. These can be nice customer oriented facilities which can give real added value at minimal cost, but if customers want to download a movie or send large power point presentations then they can be asked to pay extra for that," he advises.
Steele adds: "Most people would rather pay a little extra and have it work properly than have it free but useless. It's no good offering it as a marketing gimmick without talking to the technical people about the implications as that will only result in your service levels suffering."
Hilton has adopted this strategy and offers a range of internet choices, including BT Openzone in the public areas and a high speed broadband in guest rooms. The group offers its loyalty card holders free high speed access at all its hotels, while some brands, like Hilton Garden Inn and Hampton by Hilton, offer free wireless access to guests as part of their ‘brand promises', and others like Hilton Hotels and Resorts charge hourly or 24-hour rates for broadband.
Some hotels have none-the-less decided to go totally free.
Nordic hotel chain, Scandic, offers free wireless internet access in public areas, meeting rooms and hotel rooms with no usage limit in terms of time or data for hotel guests. To connect to the system users need a WLAN card or there are also workstations available with desktop computers, wireless and wired Internet access and printers available in the hotel's public areas.
Similarly, Red Carnation hotels offers free Wi-Fi to all guests. Managing director Jonathan Raggett says: "We decided that we did not want to take a ‘nickel and dime' approach." The group provides free Wi-Fi, mineral water, daily newspapers and a welcome drink at no additional cost to the room rate and guests are advised that Wi-Fi is available free of charge at check in.
"It's all part of our ethos," adds Raggett. "We've noticed that some guests are very appreciative of this gesture, while others simply expect Wi-Fi to be included at no additional charge."
It's not enough to just offer free Wi-Fi, operators need to make the service work for them by increasing revenue in other ways. Matthews explains: "For hospitality outlets, having the ability to communicate with your customers at the most valuable point of sale - when they're actually in the venue - makes all the difference. This is why mobile apps matter to your outlet."
He advises that the key to a successful app is not to treat it like a replica of the website. The best apps are rich in data content, such as video footage. "This is where Wi-Fi comes into its own," he adds. "It will provide a signal that is strong, reliable, consistent - and crucially - is able to operate throughout the venue, be it downstairs in the basement or in the many venues that struggle with 3G coverage."
CiarÁ¡n Fahy, managing director of London's Cavendish hotel says: "It is up to every hotel to determine its position in the market, what is important to their guests and set a price and offering based on that understanding. Make sure you offer best value overall and meet the needs of your guests."
But Fahy warns operators to beware of customers abusing free Wi-Fi access. "I was in a café recently where the whole of the downstairs was occupied by people using the "free" Wi-Fi, in the hour I was in there. No seats were available for the actual customers buying coffee and I noted about 20 people turning around and leaving."
Bruce agrees: "The more sophisticated operators have recognised they have to offer some element of free Wi-Fi to be competitive, but that doesn't mean it has to be all free as then it's a double whammy of losing revenue and incurring extra running costs."
He adds: "If it's unconstrained and free for everyone, you really have to do your sums as you have to assume people will use it more. You don't want it to then become a dissatisfier because it doesn't work properly."
How to use Wi-Fi to sell more
1 Customers using Wi-Fi often stay longer than they planned -it's a chance to offer them another coffee, or upsell to a slice of cake.
2 Brand your Wi-Fi landing page to show your customers they're getting the service from you.
3 The landing page is also valuable real estate to place promotions - discount codes or timed offers that change depending on when people log on, for example.
4 Provide your own app to make use of your Wi-Fi, giving customers an easy way to buy your products or services.
5 Gather data through Wi-Fi to learn more about your customers' behaviour and use this to target customers with the right marketing messages at the right times.
Source The Cloud
Investing in infrastructure
The Cavendish has invested over £100,000 in IT infrastructure over the past two years to provide guests with fast, reliable and secure fixed and wireless broadband internet access in all bedrooms and public areas.
The hotel incurs substantial costs to maintain the systems, upgrading them and monitoring its security.
Managing director CiarÁ¡n Fahy says: "To deliver the fast reliable secure broadband in a building of this size and complexity requires a massive investment, not only in money, but also in management time to monitor compliance. Internet security is becoming more complex and expensive."
The public areas, meeting rooms and first floor lounge all offer free high speed wireless internet access for all guests, as well as three Apple Mac workstations with printer facilities.
The hotel does charge for its in-room internet (£15 for 24 hours), which is comparable in its competitor set. Fahy adds: "Of course we make a mark up. We make a mark up on every service we provide, that is how we stay in business and make a return on the massive capital investment required to operate a hotel in central London."
Learn More about Wi-Fi provision
HOSPACE 2011 Conference & Exhibition Thursday, 24 November 2011, Sofitel Hotel, London Heathrow (Terminal 5)